The Macerich Company (NYSE:MAC) reported second-quarter 2016 adjusted funds from operations (“FFO”) per share of $1.02, which came in higher than both the Zacks Consensus Estimate and prior-year quarter tally of 97 cents. Improvement in releasing spread and same center net operating income aided the result.
Macerich posted revenues of $259.9 million, surpassing the Zacks Consensus Estimate $241 million. However, the year-ago quarter revenue figure was of $323 million.
Quarter in Detail
As of Jun 30, 2016, mall portfolio occupancy decreased 50 basis points (bps) year over year to 95%. Mall tenant annual sales increased to $626 per square foot from the $623 at the end of second quarter 2015. In addition, re-leasing spreads rose 16.1% on a year-over-year basis. Also, same centers NOI grew 6.5% during the quarter.
As of Jun 30, 2016, on a pro rata basis, Macerich’s share of cash and cash equivalents were $149.9 million, compared with $192.7 million as of Mar 31, 2016. Moreover, the company had a total debt of nearly $7.4 billion (on pro rata basis), up from $7.1 billion at the end of the prior quarter.
2016 Guidance
Macerich has reaffirmed the guidance range for 2016. The REIT expects FFO per share in a range of $4.05–$4.15. The Zacks Consensus Estimate of $4.09 falls in the range. Also, the company anticipates 2016 cash same store NOI to grow 4.50–5.00%.
Our Viewpoint
We believe Macerich’s premium operating portfolio shows promise, going forward. Improving mall tenant annual sales per square foot and re-leasing spreads would pave the way for a robust top line.
Currently, Macerich has a Zacks Rank #2 (Buy). Investors interested in the retail REIT space may consider stocks like Acadia Realty Trust (NYSE:AKR) , Equity One Inc. (NYSE:EQY) and National Retail Prloperties, Inc. (NYSE:NNN) . All these stocks hold the same Zacks Rank as Macerich.
Note: All EPS numbers presented in this write-up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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